• Johnny Barrelli Schlömer
  • Lars Norden


Business Cycles, Macro-Economic Fluctuations, Firm Performance, Banking, Information


In this study we review the literature on how macroeconomic fluctuations unfold for firms, banks, and information. As firms' most important decisions related to capital investment, which determines a firm´s long-term prospects and shareholder value creation are directly affected by the cycles, our research reviews how firms are affected by business cycles. Moreover, as banks represent the link between macroeconomic conditions and the real economy through credit, we also review the influence of cycles on banking activity. This additional approach is necessary because of the uniqueness and specialness of banks. Based on the literature that identifies recessions as periods of flight to quality and with credit as the financial accelerator of crises, it is important to consider a review that encompasses both firms and banks. Similarly, as the credit process and lending standards are grounded in information production, we also shed light on the behavior of hard and soft information through cycles. Thus, we provide a comprehensive and integrated view of business cycles and their effects on credit origination and banking until borrowing firms. With this review, we broaden investors' understanding of different firms' behaviors across business cycles and go beyond by including banks in the research. Moreover, concerning the welfare costs associated with ramps and hollows of economic output along the cycles, our research allows the establishment of policies intending to smooth cycles. Thus, based on this integrated literature review, our main conclusion indicates that smoothing cycles is beneficial to the real economy. For policymakers, this result indicates that moderate macroeconomic fluctuations and cyclicality are preferred from a welfare perspective when economic agents are risk-averse, which is in line with policies, rules, and regulations that reflect this preference and aim at reducing the volatility or cyclicality of economic variables.


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How to Cite

Johnny Barrelli Schlömer, & Lars Norden. (2023). CYCLICALITY OF FIRMS, BANKS AND INFORMATION: AN INTEGRATED REVIEW. InterSciencePlace, 18(3). Retrieved from